Licensed to kill: Amazon revamps Cloud Player to take on iTunes

One year after it introduced online music locker Cloud Drive, Amazon has revamped its built-in streaming service Cloud Player with a raft of features to take on Apple's incredibly successful iTunes.

This includes iTunes Match-like "Scan and Match" storage, cross-device support and an upgrade to the audio quality, but – perhaps most importantly – it includes the music licensing Amazon originally eschewed when it launched Cloud Player.

Amazon might be “taking on” Apple, but it couldn’t have done so without using the exact same behind-the-scenes dealing with record labels that’s helped make iTunes number one.

And while Amazon and Apple might be going head to head, it’s the labels that will be the real winners as both sides offer the same content from the same suppliers.

The revamped Cloud Player packs two important features. The first is it saves customers’ Amazon MP3 purchases to be played on its own Kindle Fire as well as on Android device, iPhone or iPod Touch. Play on Roku streaming players and Sonos home systems is promised soon. The other big feature is that Amazon will scan your iTunes and Windows Media Player libraries and match them – whether bought online or ripped from CD – so you don’t have to tediously upload every single piece of music you own.

Sign on the dotted line

None of this could have been done without Amazon signing agreements with the music studios to license their tunes for use on Cloud Player. Amazon has inked deals with every one of the big Four – Sony Music Entertainment, EMI Music, Universal Music Group and Warner Music Group – as well as with over 150 distributors, aggregators and music publishers.

Amazon was last year reported to have surprised the labels with Cloud Drive, a locker for storing your music online, as it had not done any deals to license their music. Neither had Google, which last year launched its own music locker – Google Music.

Apple, however, was on board with licensing and it is reported to have paid three of the four big labels in order to license their music for use on iTunes.

MP3tunes.com goes bankrupt, Amazon gets the fear

Amazon's change of heart on music licensing is arguably a result of a US test case that cropped up soon after its launch of Cloud Drive. In August 2011, a US court ruled that tiny music venture had infringed copyright laws on music. The start-up was MP3tunes.com – which offered a periphery service at sister site Sideload.com, where users could store and share links to music files online, the majority of which linked to unlicensed content – and the case was brought by EMI. The label took the sites' founder, tech entrepreneur Michael Robertson, to court a year after MP3tunes.com launched without a licence.

EMI’s case centred on the issue of how Sideload.com stored unlicensed music that was covered by copyright and how it was disseminated via its music locker service, MP3tunes.com. The court looked at whether the music in MP3tunes.com had been copied and stored illegally without the permission of the music's owners.

So who is the music owner? Is it the person who paid for it or the music label? The court found that it was the latter, which means music fans are basically leasing the music from the label rather than taking ownership when they buy a track. So no passing it on then...

The EMI case was settled in August last year. Robertson won part of his case as the US judge ruled that MP3tunes.com was protected under the Digital Millennium Copyright Act’s (DMCA) safe harbor provision, but - importantly as far as Amazon would be concerned - Robertson lost the part of the case covering failure to remove copied files of music once a violation had been identified. In May this year MP3tunes.com filed for bankruptcy protection.

Without proper licensing, there’s no way Amazon could have brought Cloud Player to life with Scan and Match without being shot down by the labels – the risk was too great. Scan and Match works by seeing what you’ve got in your library and looking for a copy in Amazon's cloud, which it duly plays for you when you use the player; so it is not actually uploading the track from your device.

At the time Cloud Drive launched – with Cloud Player bundled in – Sony had said it wanted to reach a deal with Amazon but was keeping its legal options open.

If Amazon had gone ahead without sorting out licensing, then it would have been just a matter of time before legal options were exercised, and things would have gotten expensive for Amazon. Under US law, statutory damages run between $750 and $150,000 per infringement.

EMI held off going after MP3tunes.com for a year, giving plenty of time for violations to build up. It was just a matter of time, really, before an action would have been brought against Amazon.

Plenty of people will – or should – enjoy Amazon’s new music player. Will it be radically different to iTunes? Not judging by features and catalogue. A deal was inevitable, but a shame given it likely leaves only those with the deep pockets to license label catalogues upfront in a position to offer such services.

Also, it's open to question whether even the big names can make money on cloud music services after they’ve covered the costs of licensing. Much will depend on the individual terms of the licence – covering things like cents and pennies per play per user. The terms of these deals are not made public, though. ®